CANBERRA: Disappointing economic news and concern about the federal budget are worrying consumers. The ANZ-Roy Morgan consumer confidence index fell 1.0 per cent in the week ending April 3, with levels now having edged lower for three consecutive weeks.
While confidence levels remain above the long-range average, the slip of the index to 113.4 means the four-week moving average is now falling. ANZ’s head of Australian economics Felicity Emmett says consumers are concerned about the future of the economy.
“The disappointing news-flow around the economy seems to be creating uncertainty about the economic outlook for households,” she said. “Employment growth has slowed, retail sales have disappointed and house prices have softened.” Ms Emmett said government machinations ahead of the federal budget on May 3 could also be affecting confidence.
“With the coalition now behind in the polls and Prime Minister Malcolm Turnbull’s personal ratings falling, optimism over the potential for the current government to implement lasting reform seems to be fading,” she added.
The sub-index covering views about the economy over the next five years fell a sharp 7.6 per cent, while the outlook for the next 12 months fell 0.8 per cent. Despite concerns about the wider economy, consumers were surprisingly more upbeat about their own hip pockets.
Households’ views of their current finances compared to the same week a year ago were up 2.6 per cent. Respondents were also 0.2 per cent more optimistic about their finances over the next 12 months. The consumer confidence data came as a survey showed Australia’s services industry has contracted.
The Australian Industry Group’s Performance of Services Index (PSI) fell 2.3 points to 49.5 points in March, with a move below 50 indicating the sector is shrinking. Ai Group chief executive Innes Willox says the sector’s brief return to expansion in February was, obviously, short-lived. “The ingredient missing from a more robust performance remains the continuing business restraint, particularly in relation to investment,” Mr Willox said.
Elsewhere, Australia’s trade balance remains in the red with a deficit of $3.4 billion in February, following a deficit in January of $3.2 billion. Economists had expected a deficit of $2.5 billion in February. Exports fell 1 per cent in the month, while imports were flat, the Australian Bureau of Statistics said on Tuesday.
